When to Refinance

I have had an interesting week. A trip to the ER and a crazy week at work.

So rates are lower, right? If this is supposed to be a deal site, helping you save money including refinancing your home needs to be included.

Here are some of my tips if you are looking at refinancing your home.

Do you knnow what your goal is? And no, saying that you want the lowest monthly payment possible is not the best goal in the world. That can lead to a bad loan product.

You need to balance the 3 main reasons for refinancing both their pros and cons.

1) To reduce your mortgage payment. It is called a rate and term refinance. Can you refinance and keep your mortgage term roughly in line with it's current schedule and lower your payment? If you can, how much money would you need to save on a monthly basis to justify any closing costs involved? For example, is it worth it to save $30 a month but extend your term 2 years and have $1000 in closing costs? Probably not, but $75 a month possibly would. You need to decide.

2) Shorten your term. Can you refinance and reduce your mortgage term and keep your mortgage payment similar to what it is now? If you can with minimal cost, it may make it worth.

3) Consolidate or cash out on your mortgage. Credit cards, medical bills, unsecured loans anyone? If you have the equity and have a cash crunch, refinancing to consolidate your debt may be worth it. But do you really want to pay for the $2500 unsecured loan for the next 30 years?

A good rule of thumb is to save at least 1% over your current interest rate and re-coup the closing costs within a 2 year period.

If you have questions or just want some advice from a mortgage professional, such as myself, drop me a line. I'd be happy to discuss your situation and help you determine what makes the most sense in your situation.